Quick Take: Although only a fraction of cleantech investment goes to smart grid, it still pays to follow trends in that larger market. The latest report from Bloomberg New Energy Finance reveals that the investment is trending slightly lower... much as it is in the smart grid subsector, which has been flat for some time now.

Key points to note:

• Policy uncertainty continues to be a blocker
• Utility-scale projects dropped by 10% from the year before
• The US, Europe and China are losing momentum while South America, Asia and Africa are gaining
• Although down from last year, the cleantech sector is still recording healthy investment

- By Jesse Berst

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Global investment in Q3 2012 hit $56.6 billion, down 5% from the second quarter and 20% lower than Q3 2011. What happened?

As Bloomberg put it, "The challenges facing clean energy in the third quarter continued to include policy uncertainty in key markets such as the U.S., the UK and Italy, and the dampening effect of low sector share prices on public market and venture capital investment." Bloomberg also said cheaper wind and solar PV technologies mean the same power capacity now costs less, and also that asset finance of utility-scale projects like wind farms, solar installations and biofuel plants dropped 10%.

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Michael Liebreich, Bloomberg New Energy Finance CEO, commented "The fact that 2012 looks like being a down-year is disappointing, but not surprising – indeed we predicted as much in January. The decline should not be exaggerated either. The third quarter figure was still well over $50 billion – roughly equivalent to investment in the whole of 2004."

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Liebreich also said "The location of some of the biggest projects financed in Q3 this year highlight the geographic shift that is taking place in clean energy, with established markets such as the U.S., Europe and China losing momentum while newer markets in South America, Asia and Africa pick up steam."

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Jesse Berst is the founder and chief analyst of Smart Grid News.com, the industry's oldest and largest smart grid site. A frequent keynoter at industry events in the U.S. and abroad, he also serves on advisory committees for Pacific Northwest National Laboratory and the Institute for Electric Efficiency. He often provides strategic consulting to large corporations and venture-backed startups. He is a member of the advisory boards of GridGlo and Calico Energy Services.

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